When Government Builds a Business

What if the U.S. federal government were to build a brand-new business from scratch? Would it, with the full backing of the resources of the U.S. government, be an unparalleled success? Or would it—because none of the people who work for the government are really smart enough, capable enough, or competent enough to run anything well—be doomed to fail?

Thanks to the Affordable Care Act, which is most popularly known as “ObamaCare”, we now have the answers to these questions! The Associated Pressreports on how well the U.S. government’s experiment to create 23 brand-new non-profit health-insurance businesses called “Consumer Operated and Oriented Plans“, or “CO-OPS”, is going:

WASHINGTON – Nonprofit co-ops, the health care law’s public-spirited alternative to mega-insurers, are awash in red ink and many have fallen short of sign-up goals, a government audit has found.

Under President Barack Obama’s overhaul, taxpayers provided $2.4 billion in loans to get the co-ops going, but only one out of 23—the one in Maine—made money last year, said the report out Thursday. Another one, the Iowa/Nebraska co-op, was shut down by regulators over financial concerns.

The audit by the Health and Human Services inspector general’s office also found that 13 of the 23 lagged far behind their 2014 enrollment projections.

The probe raised concerns about whether federal loans will be repaid, and recommended closer supervision by the administration as well as clear standards for recalling loans if a co-op is no longer viable. Just last week, the Louisiana Health Cooperative announced it would cease offering coverage next year, saying it’s “not growing enough to maintain a healthy future.” About 16,000 people are covered by that co-op.

“The low enrollments and net losses might limit the ability of some co-ops to repay startup and solvency loans, and to remain viable and sustainable,” said the audit report. A copy was provided to The Associated Press.

To correct the AP’s reporting, we should note that since the U.S. government has been running large deficits without interruption for years, no money collected from U.S. taxpayers was used to fund these poorly considered non-profit ventures, as the U.S. government instead borrowed the money to “invest” in these 23 brand-new non-profit businesses, of which 22 are failing.

But rest assured that the Obama administration’s top people understand what they’re doing and are on top of the situation!

In a written response to the audit, Medicare chief Andy Slavitt said the administration agrees with the findings as well as the IG’s recommendations for closer oversight and clearer standards. He also offered a defense of the co-ops, saying they don’t have an easy job.

“The co-ops enter the health insurance market with a number of challenges, (from) building a provider network to pricing premiums that will sustain the business for the long term,” Slavitt said. “As with any new set of business ventures, it is expected that some co-ops will be more successful than others.”

The administration “takes its responsibility to oversee the co-op program seriously,” he said.

Ah yes, the “solution” to making 22 businesses that only have to break even to remain solvent and be successful is the adoption of clearer standards and more government oversight. What could possibly go wrong?

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